Canada Libor Investigators Escalate Dispute with RBS

The Canadian agency investigating
whether banks manipulated a key global interest rates accused
Royal Bank of Scotland Group on Wednesday of failing to
cooperate with its probe and of making misleading statements
about it.

Escalating a dispute over the Canadian Competition Bureau's
request for internal documents, the Ottawa-based agency said RBS
was not cooperating fully, as the bank claimed, with the probe
into possible collusion in setting the yen Libor rate.

"The suggestion that the RBS Group is 'co-operating fully'
with the bureau is false," the federal agency said in a
statement on its website.

RBS said it has challenged the Canadian investigators'
methods for obtaining information due to confidentiality
concerns, but is willing to find alternative ways of turning
over the documents.

"It is simply not accurate to imply that we do not want to
cooperate with the Canadian Competition Bureau," the bank said
in a statement.

When asked why the bureau took the unusual step of going
public with its spat with the bank, a spokesman said it felt
compelled to react after seeing media reports of the RBS
statement, included in its quarterly earnings report.

"We take misleading statements regarding our investigations
very seriously, so in this case we did not hesitate to release a
statement, to take the appropriate action to correct them," said
Phil Norris, the spokesman.

More than a dozen banks are being probed in connection with
fixing the London Interbank Offered Rate (Libor). U.S. and UK
authorities have also been investigating RBS' possible role in
any wrongdoing.

COURT CHALLENGE

The Competition Bureau won a court order in May 2011
requiring RBS to turn over documents that would help in the
investigation into whether RBS and other banks tried to
influence how the London Interbank Offered Rate (Libor) is set.

RBS won a stay of the order from a Canadian court in
November, until a challenge of the law could be heard.

RBS launched that challenge in January. It says the
documents from its parent company in Britain would contain
information identifying individuals and clients, violating
United Kingdom data protection and banking confidentiality laws.

On Wednesday, the bank repeated those arguments and defended
its statement on cooperating with the Canadian investigators.
It said it had proposed a way around the problem and suggested
the Canadians were being inflexible.

"To overcome this issue we have offered a number of
alternative mechanisms, however, thus far, the Bureau have
refused these offers. We have worked through this problem with
other regulators and remain committed to cooperating fully with
the CCB," it said.

A bank source familiar with the controversy said the
Canadians could make a request for documents directly to the UK
government under a mutual legal assistance treaty. This would
result in the UK producing the documents without breaching
confidentiality laws.

The source said U.S investigators had used that method to
get RBS documents with success.

Many expected RBS to be one of the next banks to settle
after British rival Barclays was fined $450 million in
June.

RBS said earlier this month when it published third quarter
results that it expected to start talks on a settlement soon,
which would likely result in financial penalties.